itonewbie
Level 15
02-19-2024
07:05 PM
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That exception is in §1.904(b)-1(b)(3).
For the purpose of this exception, net CG and QD are not considered. Since 24% is the highest marginal rate for ordinary income that is below the highest rate of 28% chargeable for CG, your client who is within the 22% bracket could have utilized this exception if only his foreign CG had amounted to less than $20,000.
This exception is explained in layman's terms in the F.1116 instructions using the dollar thresholds for 24% to make it easier for the general public to understand.
On the basis your client's foreign CG is $71K, your client will need to make the necessary adjustments for tax differentials on Lines 1a and 18.
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